EU boost in maternity pay to cost taxpayers £2.5bn a year

If proposals to extend maternity leave to 20 weeks on full pay  are accepted by MEPs’ they would be come law in the UK and the total cost to  the Treasury would be an eye-watering £57bn between 2011 and 2030.

EXPRESS OFFER: CLAIM £15 IN FREE BETS HERE!

The  controversial change to the EU’s Pregnant Workers’ Directive was put on hold  by MEPs in March amid protests that it would mean a massive extra burden on  British business if it became law.

Now the “impact assessment” demanded  by British Conservative MEPs estimates the combined extra financial burden  at 121.18 billion euro (£101.636 billion) between now and 2030.

The UK,  which no longer has the right to block the plan because it surrendered its  veto on employment law,  would bear 47 per cent of the total says the  report - £47,832 or £2.5 billion a year.

That more than doubles the  current annual maternity costs of £2bn.

Alistair Tebbit, Head of EU  Policy at the Institute of Directors, said: “Ministers and UK MEPs should  fight this terrible proposal all the way. Public finances are so bad, and  likely to be for some time, it is hard see how the Government could afford  this.

“There’s therefore a major risk that the Government would look to  force employers to pick up all of the bill or part of it. This is the last  thing firms would need as they try to recover from the recession.

“There  is also a wider question about whether it’s desirable to create a large new  tax, in effect, on employing women. Such a move from Brussels is unlikely  improve the prospects of women in the workplace.”

Phil Orford, chief  executive of the Forum of Private Business, said: “This couldn’t come at a  worse time for small business owners as they struggle with a limp economic  recovery and a highly uncertain future.”

And Katja Hall, CBI Director of  Employment Policy, added: “The UK already offers generous maternity  provision and pay. With the public finances stretched and companies  struggling to keep people in jobs, now is not the time to tinker with the  maternity system.”

The British Chambers of Commerce (BCC), which called  six months ago for the maternity provisions to be abandoned, described the  figures - which only cover 10 out of the 27 EU countries affected - as  “eye-watering”.

BCC head of European affairs Kieran O’Keeffe, said: “This  Directive should be about setting minimum

EU standards for the health and  safety of pregnant workers - not adding new payroll costs for overburdened  companies and national social security systems.

“These figures confirm  that the Parliament’s proposals are completely unaffordable as governments  across the EU seek to deal with budget deficits and the aftermath of  recession.

“The European Commission’s original proposal to extend  maternity leave to 18 weeks, but with individual member states allowed to  decide the level of pay, is a better, more affordable option.”

Current UK  rules give pregnant women a full year off, with just six weeks paid at 90  per cent of the mother’s average pay, followed by 33 weeks on Statutory  Maternity Pay of £123 a week - 55 per cent higher than sick pay. The rest is  unpaid.

Under existing EU rules agreed in 1992, minimum maternity leave  is set at 14 weeks, with pay for the duration to be no lower than sickness  pay in the member state concerned.

There were warnings that the move  could discourage companies from employing women of childbearing  age.

Although the state currently reimburses firms for the bulk of  statutory maternity pay, business leaders fear the scale of the increase  would see struggling companies ordered to shoulder more of the burden.

UK  Independence Party MEP Godfrey Bloom said: “It has to be madness to  introduce these new laws at any time, but particularly now. Britain’s small  business sector is already struggling under the weight of misguided  regulation, and this will be the hammer blow that could knock many out for  good.

“How can these measures improve the lot of women? Years ago I was  lambasted by the commentariat for making the unarguable point that to employ  a woman of child bearing age in the light of maternity legislation would be  a foolish thing to do. Today even the Equalities Commission agree with  me.

“But these economic lunatics in Europe seem to be unable to  understand a basic fact. There is no point in maternity leave, if there are  no jobs to take that leave from.”

The French also face a staggering bill  of just over £40bn, while the Germans, who have a different maternity  system, will pay just £3.3bn.

Employment Relations Minister Edward Davey  said: “Negotiations on the Pregnant Workers Directive are of crucial  importance to the UK.

“Our own analysis shows that the amendments put  forward by MEPs on maternity pay would cost us up to £2 billion. To put this  into context, we currently spend around £2 billion a year on maternity pay –  meaning the cost would effectively double.

“This is a substantial  increase at a time when economies across the EU can least afford it.  

“Across Government we are lobbying hard to get the right deal for the  UK, and I will continue to flag my concerns to counterparts from other  Member states.”